Nigeria’s equities market faltered for the second straight week, with the NGX All-Share Index (ASI) falling 2.5 percent week-on-week (w/w) to close at 141,004.14 points.
The sustained bearish momentum, which also saw market capitalisation drop by the same margin to N89.2 trillion, reflected a combination of factors — from rising fixed-income yields to investor caution ahead of the release of half-year (H1) 2025 corporate earnings, reports Daily Independent.
As a result, the year-to-date (YTD) return on the exchange moderated to 37.0 percent, down from 40.5 percent recorded the previous week, showing a noticeable retreat in investor appetite for risk assets.
Bellwether Stocks Drive Market Weakness
The downturn in market performance was largely driven by heavy selloffs in bellwether counters across the Industrial Goods and Banking sectors. Dangote Cement, which accounts for a significant portion of the NGX’s total market capitalisation, shed 9.9 percent in the week, while BUA Cement declined 10.0 percent. Lafarge Africa also saw a mild retreat.
In the financial services space, some of the sector’s biggest names were not spared. Stanbic IBTC tumbled by 15.4 percent, GTCO dipped 3.8 percent, while Zenith Bank also lost ground. These losses underscore the degree to which blue-chip stocks have come under pressure as investors reassess portfolio risks.
Market watchers link the selloffs to two key drivers: the rise in yields in the fixed-income market and investor caution ahead of corporate earnings announcements.
With the government securities market offering increasingly attractive returns, many institutional investors are reallocating funds from equities into bonds and treasury bills.
“The spike in fixed-income yields has changed the risk-reward balance for many investors,” noted a Lagos-based capital markets analyst.
“Given the uncertainties in earnings growth, especially in cyclical sectors like banking and industrial goods, it is not surprising that we are seeing a flight to safety.”
Trading activity during the week presented a mixed picture. While the average volume of trades fell by 5.2 percent to 1.3 billion units, the average value of transactions surged significantly by 243.6 percent to N13.9 billion. This divergence suggests that, although fewer shares were traded, larger ticket sizes in blue-chip stocks dominated the activity.
Univinsure topped the chart in terms of volume with 434.2 million units, followed by AIICO (237.0 million units) and MBENEFIT (204.7 million units). By value, however, the story was quite different, with Transcorp Power (N8.8 billion), Nigerian Breweries (N5.4 billion), and GTCO (N4.9 billion) ranking as the most actively traded.
A review of sectoral performance revealed that five of the six major indices closed in the red. The Industrial Goods index posted the steepest loss of 8.4 percent w/w, reflecting the sharp declines in Dangote Cement and BUA Cement. The Insurance index followed with a 4.2 percent loss, dragged by NEM Insurance (-18.2%) and WAPIC (-11.6%).
Banking stocks also weighed heavily on the market, with the index slipping 3.5% due to profit-taking in Stanbic IBTC and GTCO. The AFR-ICT index shed 1.2% w/w, reflecting selloffs in MTNN (-2.2%), while the Oil & Gas index dropped 0.8%, hurt by declines in Oando (-6.0%) and Conoil (-10.0%).
The only bright spot was the Consumer Goods index, which advanced 0.8% w/w. The sector was buoyed by gains in International Breweries (+4.8%) and Dangote Sugar (+7.2%), reflecting selective buying interest from investors positioning ahead of earnings reports.
Investor Sentiment Weakens
Investor sentiment, as measured by market breadth, worsened further to -0.22x from 0.02x in the prior week. Out of 146 traded stocks, 43 gained, 54 lost, and 49 closed flat.
The week’s top gainers were Austin Laz (+20.8%), NCR (+20.7%), and Enamelware (+19.4%), reflecting strong speculative demand in some small- to mid-cap counters. On the losers’ chart, Thomas Wyatt (-18.9%), NEM Insurance (-18.2%), and Stanbic IBTC (-15.4%) led the pack.
Market operators said the broad weakness in sentiment reflected more than just sectoral headwinds.
“We are seeing a combination of profit-taking, portfolio rebalancing, and cautious positioning ahead of corporate earnings,” said another analyst.
“The breadth of decline across major sectors underscores that this is not just about one or two companies, but a general pullback.”
One of the defining features of the current market downturn is the reallocation of funds toward fixed-income instruments. Nigeria’s recent monetary tightening has pushed yields higher across treasury bills and bonds, creating more attractive alternatives for investors seeking steady, lower-risk returns.
This dynamic has weighed heavily on equities. The higher the yield environment, the greater the opportunity cost of holding riskier stocks, particularly when earnings growth remains uncertain. For instance, banks face mounting challenges with rising non-performing loans and elevated funding costs, while cement producers are grappling with weaker demand and high energy costs.
As a result, investors have increasingly shifted towards safer assets.
“It’s not necessarily a crisis of confidence in equities,” explained an investment strategist. “It’s simply a recalibration — with fixed income offering double-digit returns, the bar for equity investments is now much higher.”
Looking ahead, analysts expect the bearish bias to persist in the near term, though selective bargain-hunting could provide temporary relief. Interim dividend declarations for H1:2025 may attract some buying interest in specific counters, particularly in the banking and consumer goods sectors.
However, the broader outlook remains subdued given the absence of strong positive catalysts.
“Unless earnings surprises on the upside or the macroeconomic picture improves significantly, equities may continue to face pressure,” analysts at a Lagos-based investment house said.
For investors, the current environment presents both risks and opportunities. Defensive positioning in dividend-paying stocks could offer relative stability, while long-term investors may see the correction as a chance to accumulate fundamentally strong counters at lower valuations.
Still, with the NGX-ASI now on its second consecutive week of decline, market watchers agree that volatility will remain a dominant theme in the short term.
“Until we see clarity on inflation trends, interest rates, and the trajectory of corporate earnings, equities will struggle to sustain momentum,” one trader concluded.
